1. Budgeting: Making the Most of Your Money
Unit 2

2. Objectives for Unit 2 Budgeting : Making the Most of the Money
Examine your spending habits.
Know the benefits of having a spending plan, or budget.
Identify various source of income.
Indentify types of expenses
Knowing the importance of saving (paying yourself first)
Be able to construct a budget.
Examine forms of recording involved with budgeting and cash management.
Consider how a budget will change throughout your life.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

3. Where should all my money go?
Money mangers should know what to count on as income. From that spend on the money on bills, and day-to-day purchases. Money is set aside for big expenditures for operations of the company.
This unit is to learn to be smart with your money. Where it goes and decide when bills get paid and deal with large expenditures.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt
Page 15
Did you know?
Almost 60% of millionaires use a budget to manage their money.
-Millionaire Next Door. Surprising Secrets of America's Wealthy

4. How Does Your Spending Measure Up?
Review your Spending log from Unit 1
What did you learn from your spending habits?
Where there any expenditures you regretted?
Budget is a plan for managing your money during a period a time.
Its not to deprive yourself, but to be able to reach your financial “SMART” goals.
Every business have budgets for everything, payroll, expenditures, capital improvements, inventory, and supplies.
“Every dollar saved is a dollar to the net profit.”
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

5. Smart Spending
In your spending log you have a habit to buy a soft drink on the way home at the convenient store for $1.69.
At the end of the month you spent $33.80 or $ for the entire school year (180 days).
Could you be smarter with your money?
Avoid spending on things you really don’t need.
This way you have the money for the things you really want.
If you received a prize of $50, how will you spend it? Due to values of each person each person will have different ideas to spend it.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt
Page 16

6. Assignment 2-1 How am I Doing?
Compare your spending log from Unit 1 with your financial plan. How well your current spending habits represents your financial goals?
If not what type of budget (spending plan) are we going to have to reach your financial goals?
What do you think the benefits you will have in having a personal budget?
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

7. Assignment 2-1 Expenses Matches Goals (Yes or No) Adjustments Needed
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

8. Part 1 of the Equation: Income
Cash flow: The money coming in as it relates to going out.
Income: Money you received for a period of time. Your job, gifts, personal things that you sell.
Taxes: payroll deductions to pay for government programs. Local, state, and federal level.
Social Security Tax (FICA)
Medicare Taxes
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

9. What’s a W-4 For?
There is a saying that goes “The really certainly in life is death and taxes.”
The government uses the W-4 form to figure out you financial tax obligations. The following factors deal with the amount of tax you pay:
Income
Marital Status
Dependence (children, or other people you financially support)
Any other deductions you want to add.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

10. Part 2 of the Equation: Expenses
Expenses are what you spend money on your needs and wants.
Fixed expenses: The same cost each period of time, such as rent, car payments, etc.
Variable expenses: fluctuates in amount of usage. These expenses are easier to control, such as utilities, telephone, food, etc.
Periodic or occasional expenses: These expenses are not paid every month such as car insurance is paid every 6 months, water and sewage every 3 months, etc.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

11. Exercise 2C: What type of Expense Is It?
Description
Fixed?
Variable?
Periodic?
Groceries
Piano lesson fee
Cable TV bill
Magazine subscription renewal
Car loan payment
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

12. Assignment 2-2 My Fixed and Variable Expenses
Fixed Expenses
Variable Expenses
Periodic/Occassional Expenses
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

13. Did You Know? The average person spends money three times a day.
Putting aside every coin you touch results in saving about $50 a month
A $5 sandwich usually have less than $1 worth of ingredients.
If you purchase a soda a day at the store, you can easily spend over $400 a year.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

14. The Most Important Expense
Your financial goal should be the highest of any expense that you have. You are earning the money, you should earn the right to achieve your goals.
“Pay Yourself first” (PYF): Money you put aside for your financial goals (retirement, trips, new car) something that is important to you.
Use of Roth IRAs, and other investments that employer can put directly money each paycheck into it.
If you don’t see it you don’t miss it.
Set up an emergency fund, to take care of unexpected expenses, such as car repairs, tires, unexpected unemployment.
This should be about 6 months of salary.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

15. Exercise 2D: Saving to Meet Goals
NEFE High School Fiancial Planning Program
The Simpson family wants to buy a new refrigerator for the kitchen. Mr. Simpson has visited several stores and estimates that it will cost $700 to buy and install the type of refrigerator the family wants. The goal is to buy the refrigerator in 6 months. How much do the Simpsons need to save each month?
The Mencias want to buy their oldest daughter a computer to take to college next year. They’ve shopped around and think they can get a good desktop computer, software, and a printer for about $1,100. With 15 months to save how much money they need to set aside each month?
Mr. Dave Schmidt

16. Exercise 2D: Saving to Meet Goals- Answer
$700 ÷ 6 =
$1,100 ÷ 15 =
$116.67
NEFE High School Fiancial Planning Program
$73.33
Mr. Dave Schmidt

17. Assignment 2-3: Saving My Goals
Smart Goals
Total Amount Needed
Amount to Save Each Month or Week
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

18. The 411 on Creating a Budget
The five steps of Financial Planning.
Get SMART Goals
Analyze Information
Create a Plan
Implement the Plan
Monitor and Modify the Plan
Creating a spending plan or budget works the same way. Your financial goals is instilled in your budget. If you follow your budget you will reach your goal
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

19. Building a Budget Decide a time frame
List the money received each time period.
Total Income
Categorize your expenses.
Total Expenses
Budget Overruns/Shortages.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

20. Assignment 2-4: Build a Budget
Please read the information about Jessica.
Use data provided to outline a personal budget for Jessica.
Make sure that Jessica’s total expenses don’t exceed her total income.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

21. Assessment 2-1 My Personal Budget
Go to page 23 of the workbook and complete your personal budget, using Microsoft Excel and use the format as shown before.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

22. Keeping Track Check bank account statements
Saving and Investment statements
Paystubs
Tax Deductions
Insurance Statements
Loan and Credit Card Statements
Credit Card Fraud
Receipts and warranties for big ticket items.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

23. Staying on Track The Envelope System The Tally System
Track with checking account register,
Budget Spreadsheet
Personal Finance Software:
QuickBooks
Peachtree
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

24. The Living Budget Budget are not written in stone.
Adjustments are made when income increases or decreases.
Increases and decreases in your Expenses.
Changes in saving goals will be necessary to change your budget.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt

25. Exercise 2E: Jessica’s Budget Needs Adjusting
NEFE High School Fiancial Planning Program
Page 25 Take Jessica’s budget and make the adjustments with the new information provided.
Mr. Dave Schmidt

26. Adding it Up
A financial plan makes you personal life easier, because you have a plan on the what you make and you have a plan to spend the money to meet your requirements and goals.
It takes the stress out of your life of financial worries.
You learned about Paying Yourself First. Make sure that the money you earned reaches to your financial goal.
NEFE High School Fiancial Planning Program
Mr. Dave Schmidt
For more tips , tools, and articles about budgets, visit hafpp.nefe.org

27. Unit Assessment 2-1 My Personal Budget
On page 26 Using Microsoft Excel prepare your personal budget.
Include the following information in your budget:
NEFE High School Fiancial Planning Program
Anticipated income, savings, and expenses for a month based on your current situation.
An explanation of how the budget supports each of your personal goals.
Mr. Dave Schmidt